Consumer confidence takes ‘big fall’ following months of slow build

After six months of slowly building consumer confidence, sentiment has taken a dive, with both general economic and personal financial confidence falling this month, according to GfK’s September Consumer Confidence Index, indicating a “feeling of worry” among consumers.

The overall measure of consumer confidence fell to –20, a seven-point decline from August, and a return to similar levels seen at the beginning of this year.

Last month, overall confidence was at its highest level since September 2021 and had been on an upward trajectory since April. However, despite stable inflation, the latest results indicate pessimistic sentiment looking to both the future and the past 12 months across personal finance, the wider economy and intentions to make big-ticket purchases

Consumer confidence regarding future general economic outlook has been falling ever since the General Election. This month, confidence was down 12 points to –27. In August it was –15 and July –11.  Despite the drop, this is still two points higher than a year ago.

As consumers await the budget in October, the outlook for their own personal financial situations is also pessimistic. This month confidence fell nine points to –3.

Neil Bellamy, consumer insights director at GfK questions whether this is a “straightforward but long-overdue correction to misplaced optimism over recent months” or if there is “more in store” once consumers see the autumn budget.

“Marketers like confident shoppers and for many months we’ve seen consumer confidence slowly building following the enormous challenges of COVID, Ukraine and the inflation crisis that followed,” he says.

“But there’s an obvious feeling of worry about what the future holds in September’s consumer confidence figures.”

Reflecting on the past year, consumer confidence in the economy is two points lower (-37) than last month. Regarding consumers’ own financial situation, confidence is down two points to –9. However, this is still an improvement from 12 months ago, when it was –18.

The major purchase index, which measures intention to purchase big-ticket items, declined 10 points to –23, although it was five points higher than in the same month last year.

Bellamy says the forward-looking indicators are “not encouraging news for the UK’s new government”.

“Successful marketers have all the skills required to navigate change and they will be applying those skills in the months to come.”